What Is Direct and Indirect Employment?

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Direct and indirect employment vary in that direct employment involves employees who physically manufacture or produce goods, while indirect employment involves individuals who support those processes. Common examples of direct labor include equipment operators and employees who work on assembly lines. Examples of indirect employment include those who participate in quality control or are part of a support staff.

Most direct labor workers earn hourly pay, which is derived from time card data information. In many instances, direct employees are considered to be nonexempt under federal and state law and are required to be paid at least the minimum wage at the state or federal level, or whatever is higher. Indirect employees may be either salaried or hourly workers. Unlike direct employees, indirect employees are often ineligible for overtime compensation.